US 10 year T Notes

US 10 year notes have been extending the 5th wave of the decline with a large divergence on the RSI. Yesterday's tick up pushed the RSI above 30 again and this could finally mark the bottom for wave 1 and the start wave 2 up. A rally in bonds should last for several weeks before wave 3 down can start.

S&P 500

S&P completed a wedge and wave E touched the upper line. The move down gained momentum yesterday and it should go back to test the 2145 level in the coming month at the lower line of the wedge.

Brazil

A week back I concluded that Brazil may have topped but there is a change. The decline did not see any follow up and so it is best considered a 4th wave correction that ended at the wave IV of previous degree. A parallel channel from the March highs fits this structure and wave 5 up can go to 69000. 

Take this view on step further, I am expecting the dollar index to start falling and commodities to rally again so EMs especially those in the commodities space like Australia Canada Russia that made a new high yesterday will go up again.

BSE Metals index

The metals index fell in 5 waves recently but it maybe only wave c of 4 down. As shown the wave IV of previous degre at 9487 has held and not broken, and till it does this is a good support for a 4th wave correction. Holding it wave 5 may start and head to 5=1 near 12500.

Sugar

I was going to write about Sugar prices yesterday itself but it was late but now there is this news circulating so about time, from today's Sharekhan note in the morning

Sugar - The Union finance ministry is considering a proposal to restructure sugar mills’ debt, which is under severe stress due to lack of capacity utilization – positive for highly leveraged small sugar mills and sugar companies  

Here is the chart of international sugar Prices and they fell to the lower end of the rising channel to complete wave 4 down. Wave 5 up may have started and should see sugar prices make one more new high near the upper channel line at 27$. An over 30% rise in prices from current levels.

USDJPY

USDJPY starts a correction which below 116 goes to 113.4. The question is whether this is a wave 4 correction or a larger trend reversal. 113.40 will be an important level to decide.

Dollar Index

The dollar index daily momentum is in sell mode and the first support is at 102 at the 20dma. Wave 5 complete a move below 102 would see it dip to 101.40 and 99.50.

Dow Tranports

Dow Transports closed below the wave i low and the 20dma so the near term view should be for a move to 8900 near the green 40dema.

Realty

The Realty index has not been participating in the fall so far so with momentum rolling over maybe it is time. C=A for the index points down to 951. 

CNX IT

The CNX IT index faced strong resistance at the 20 week average. Most stocks did something similar. Also Infosys was at 61.8% of the previous fall. So the IT index shows wave 3 down may have started here. Momentum rolled over and the previous swing high at 10500 is a major resistance. 3=1 for the index is down to 8337.

Infosys

From the recent high of 1020 Infosys has started wave 3 of C [or 3] down and 3=1 for this leg is at 830. 980-960 is the near term support zone which once broken should see further selling develop.

Dow

The last few days on the Dow looks like an ending pattern. You may want to argue another triangle and push higher as well. But with momentum indicators diverging from prices a move below 19899 should be seen as pattern completion and the start of a long awaited correction on the US indices.

Euro

Euro - daily momentum crossed over to a buy and wave iii up should start. 1.05 and 1.054 are the first set of resistance levels.

Crude A change of hear

Crude did not correct along with the rest of the commodities in the last two weeks and is making higher bottoms. Prices are now still above the blue breakout trendline. This means that the bearish potential may be diluted. The alternate wave count is to consider wave extentions in wave v up for the move and no halt. The 20dma at 51.58 should be the pivot which unless broken on closing basis we should expect higher prices and a move towards 60$ to resume.

Copper

Copper found support near the wave iv of 1 area, near 2.438$, AT yesterdays low it is possible to complete an a-b-c fall for Copper as a zig-zag where wave c has extended into 9 legs [5+4] and is impulse.

Implications are that wave 3 up may start from the low of 2.448, momentum indicators are still to confirm. 20dma at 2.60 is the first resistance and 3=1 points to 3.20.